Marginal relief Business Tax

Probs a daft question but if you are a small company less than 300,000 do you still need to work out the marginal relief

Also if you dont have dividends do you just do it off the total income e.g

Trading Profit 100,000
Rental Income 10,000
Interest 1,000

total 111,000

111,000 x 28% = 31080

(1,500,000 - 111,000)x 111000/111000
x 7/400

or is it just simply 111000x21%

Comments

  • *Jo
    *Jo Registered Posts: 509
    Hullo,

    Im studying this as well, the way I understand it is Marginal relief is on Profits between 300,000 and 1,500,000. A profit of 111,000 would be taxed at 21% as it doesnt exceed the minimum threshold. Unless of course it was part of several associated companies when the limited are divided amongst them.

    If I am getting the wrong end of the stick please someone hit me on the head and point me in the right direction :)
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    See here

    Profits up to £300k are charged at 21%

    Profits over £1,500,000 are charged at 28%

    Anything in between needs the marginal relief calculation.

    A-Vic in your example it's just 21%

    If they have received dividends (franked investment income) then this income has to be included to work out which tax band they are in, but they don't pay tax on them (because divs have already had tax suffered)
  • A-Vic
    A-Vic Registered Posts: 6,970
    Monsoon wrote: »
    See here

    Profits up to £300k are charged at 21%

    Profits over £1,500,000 are charged at 28%

    Anything in between needs the marginal relief calculation.

    A-Vic in your example it's just 21%

    If they have received dividends (franked investment income) then this income has to be included to work out which tax band they are in, but they don't pay tax on them (because divs have already had tax suffered)

    Thanks monsoon daft me forgot to include FII which was 1000 so in that case i would 1 have to do the tax band even if i know it will be under 300000 Net
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